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Analysts Raise Their Price Targets after DRI’s Strong Q3 Earnings

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Analysts’ recommendations

After Darden Restaurants (DRI) posted strong fiscal 2019 third-quarter earnings results and raised its guidance for fiscal 2019, analysts increased their price targets on its stock. JPMorgan Chase increased its price target from $116 to $123, BTIG increased its price target from $119 to $134, Piper Jaffray increased its price target from $123 to $124, and Wedbush increased its price target from $110 to $120.

Of the total 25 analysts that cover Darden, 64% have given it “buy” ratings, while 32% have given it “holds,” and 4.0% have given it “sells.” On average, analysts have set a price target of $125.41 on the stock, which represents a potential upside of 8.0% from its March 22 closing price of $116.11.

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Peer comparison

Of the 19 analysts that cover Texas Roadhouse (TXRH), 21.1% have given it “buy” recommendations, while 68.4% have given it “holds,” and 10.5% have given it “sells.” On average, analysts’ 12-month price target is $64.79, which implies a potential upside of 6.2% from its current price of $60.99 as of March 22.

Of the total 11 analysts that cover Bloomin’ Brands (BLMN), 36.4% have given the stock “buys,” while 50.0% have given it “holds,” and the remaining 8.3% have given it “sells.” On average, analysts’ 12-month price target is $22.22, implying a potential upside of 12.4% from its current price of $19.77.

Of the 18 analysts that cover Brinker International (EAT), 22.2% have given it “buys,” while 61.1% have given it “holds,” and the remaining 16.7% have given it “sells.” Analysts’ average 12-month average price target is $47.13, which implies a potential upside of 9.2% from its current price of $43.18.

Valuation multiple

The increase in Darden’s stock price after the release of its third-quarter earnings results also raised its valuation multiple. On March 21, Darden was trading at a forward PE multiple of 18.4x compared to 17.5x before the announcement of its third-quarter earnings results. On the same day, its peers Bloomin’ Brands, Brinker International, and Texas Roadhouse were trading at forward PE multiples of 12.6x, 10.9x, and 23.9x, respectively.

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